Fresno State sees quick savings with electronic financial aid refunds

California State University, Fresno, takes pride in its reputation as one of the leading public universities in the state, but last year the business staff discovered that Fresno State was lagging in one noteworthy area: the percentage of students electing to receive financial aid refunds electronically.

"We took a hard look at our refund disbursement trends and saw that we were sending paper checks to 40 percent of our students,” says Anthony Forestiere, university controller at Fresno State. “We contacted other schools in the Cal State system and found they were sending refunds by check to only 5 to 15 percent of their students.”

The costs associated with disbursing financial aid refunds by check, rather than by ACH or other electronic systems to 8,000 of the school’s 20,000 undergraduate students was significant. “It cost us $1.10 per student per semester to process a refund check,” says Forestiere. “And that’s just hard costs—paper stock and mailing; it doesn’t include the cost of printers and staff time.”

Fresno State tried to encourage students to receive their financial aid refunds electronically, via ACH transfers to their bank accounts, but only 200 students responded to an email campaign. “We had a concern with unbanked students,” says Forestiere. “For them, there’s a security risk in carrying around checks, and a high cost in using check cashing stores to get cash. We needed an alternative that would allow students to open a bank account if they needed one.”

Early this year, the business staff investigated several services for disbursing financial aid refunds, including One- Disburse from Higher One, which is the leading provider of refund disbursement programs. Forestiere says the OneDisburse suite quickly rose to the top of the selection list. “We didn’t want to use a traditional bank because we didn’t want our students subjected to solicitations for the unrelated services that banks provide,” he says. “And we rejected a proposal from a vendor that would have required new campus cards for all students and staff. Higher One stood out because refund disbursement is their specialty and their program met our needs.”

Once selected, Higher One provided Fresno State with a twopronged training program. One team worked with Forestiere’s staff to pave the way for the financial transactions between the school and Higher One. Another team worked with university staff who would be promoting the OneDisburse program to students at the start of the 2012-2013 school year. With the OneDisburse service, all of Fresno State’s financial aid refunds are managed by Higher One.

The school sends the aggregated refunds to Higher One electronically, and then Higher One disburses the individual refunds to students. The students can elect to receive their money via ACH to an existing bank account, via direct deposit to a free bank account managed by Higher One, or by check sent by mail. “At this point, 70 percent of our students have selected a refund method through Higher One,” says Forestiere. “Our goal is to get that to 100 percent, but the good news is that we are out of the business of sending paper checks, which is an immediate savings of almost $9,000 per semester.”

In addition, he notes, his staff has been able to focus on tasks of higher priority than printing and mailing refund checks. “This is the way of the future,” he says. “There’s no going back. I see nothing but positive results for us and our students.”